While on one end payments are getting delayed after demonetisation for businesses in a segment where cash is the main medium for transaction, on the other they are seeing lenders becoming increasingly cautious about giving loans to them.

Banks are taking a relook at their MSME lending strategies as questions arise over their repayment capacities with payments from customers getting held up, said Manavjeet Singh, founder of Rubique, an online aggregator of financial products.

Meanwhile, banks have gone on an overdrive to acquire point of sales terminals for merchants to be able to accept digital payments.For instance, Dena Bank, one of the biggest lenders in the MSME space, has ordered 10,000 PoS terminals. For these businesses, going digital will also help make the loan process easier, said bankers.“If an enterprise has a habit of accepting payments digitally, it becomes easier for us to process loans for them as we get a better understanding of their cash flow and repayment capacities," said one of them.

Lenders are likely to take a lenient approach towards MSME businesses in rural areas, where the move to digital is likely to take more time than in big cities. “If we see an enterprise in an urban metropolitan area not having digital payment channels, then it will affect their credit worthiness.But in small towns and cities, we are not yet taking that as a principal criteria," said Sanjay Aggarwal, MD of AU Financier.

While being careful about lending to these companies, bankers are also worried about the possibility of them not repaying on time, citing lack of cash following demonetisation as the reason.

“Lack of cash cannot be considered as an excuse for enterprises to not repay their loans to banks.There are numerous digital channels available for payments and we are pushing them towards those means," said a senior Dena Bank official, who did not wish to be named.